2013 (10) TMI 727 - AT - Customs

Denial of DPEB benefit Waiver of Pre-deposit export of frozen / fresh chilled meat - certain certificates duly signed by the Doctors were found in the appellants factory at the time of their search and it is also a matter of record that Veterinary Doctor available in the Country were not sufficient to carry on said ante mortem and post mortem investigation. - Held that - Without going into the other factual and legal aspects are of the prima facie view that Customs authorities cannot demand duty from the exporters on any irregularity noticed by them and they should necessarily refer the matter to DGFT authorities for cancellation of such licence - law was amended in the 2012 Budget and a new section 28 AAA was introduced - The section is to the effect that where instrument (defined in the Explanation) stand obtained by an exporters by means of collusion, wilful misstatement, suppression of facts etc., and such instruments are issued by the DGFT, duty can be demanded from the person who obtained such instruments by fraud and mis-representation - explanation to the section may clarify that said section would be applicable to the use of such instruments after the date of ascent of the President - it is clear that to undo the effect precedent decision of the Tribunal, section 28AAA stands introduced in the Act but the same is only applicable prospectively and not retrospectively - appellant is entitled to unconditional stay Stay granted.

Summary

Issues involved:
1. Denial of benefit of DEPB and VKGUY scrips by Customs authorities.
2. Jurisdiction of Customs authorities to demand duty from exporters on irregularities in exports.

Detailed Analysis:
1. The judgment concerns stay petitions arising from an impugned order by the Commissioner confirming demands against an exporting firm engaged in the export of frozen/chilled meat. The firm was found to have certificates signed by Doctors in their factory, indicating non-compliance with the export policy's requirement of ante mortem and post mortem certificates. Consequently, proceedings were initiated against the firm for denial of DEPB and VKGUY scrip benefits obtained from DGFT. The Commissioner's order confirmed duty equivalent to the value of the scrips, leading to the primary issue of Customs' jurisdiction to deny such benefits.

2. The appellant contended that Customs lacked the authority to deny the benefit of the scrips issued by DGFT and to confirm duty equivalent to their value. The Tribunal referenced various decisions to support the appellant's argument. The Tribunal highlighted the Kobian ECS India Pvt. Ltd case, emphasizing that Customs should report irregularities to DGFT for scrip cancellation rather than denying benefits directly. Additionally, the Mercantile India case and the Jupiter Exports case underscored that recovery of wrongly availed DEPB scrips falls under DGFT's jurisdiction, not Customs'.

3. The judgment also referenced the Hon'ble Supreme Court decisions in unrelated cases to clarify the jurisdictional scope of Customs authorities. Furthermore, the High Court of Andhra Pradesh's decision in Sravani Impex P. Ltd. vs. Addl. Director General, DRI Chennai was discussed. The Tribunal's interpretation of this decision in Dr. Reddy's Laboratories Ltd. vs. CC, Hyderabad emphasized that Customs can question export irregularities but cannot modify DGFT-issued scrips.

4. Ultimately, the Tribunal concluded that Customs authorities cannot demand duty from exporters based on identified irregularities; instead, they must refer such matters to DGFT for appropriate action. The judgment noted the introduction of section 28AAA in the Customs Act, 1962, post-amendment, allowing duty demand in cases of fraud or misrepresentation in obtaining instruments from DGFT. However, this section applies prospectively. Consequently, the Tribunal granted unconditional stay, dispensing with the pre-deposit condition during the appeal's pendency.

5. The judgment's final pronouncement allowed the dispensation of pre-deposit and stayed the recovery of dues. While there was a difference in opinion on certain observations, the decision to dispense with pre-deposit was agreed upon. The jurisdiction of Customs authorities and the need for a thorough examination of the matter were highlighted, indicating the complexity of legal and factual aspects involved. The Revenue was granted liberty to request an early hearing due to the significant legal questions at hand.